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Acquiring bare right to sue for copyright infringement is insufficient to confer standing

In a case of substance triumphing over form, the U.S. Court of Appeals for the Ninth Circuit held that a company who was effectively assigned the “bare right” to sue for copyright infringement of newspaper articles did not, in fact, have standing to sue, because the company did not acquire any of the exclusive rights under copyright in the works. Righthaven LLC v. Hoehn, Case Nos. 11-16751; 16776 (9th Cir., May 9, 2013) (Clifton, J.).

Plaintiff Righthaven LLC (Righthaven) identifies infringements of third party copyrighted works and receives a limited grant of rights to such copyrighted works from the owner in order to take action against the alleged infringers. In separate lawsuits, Righthaven sued Wayne Hoehn and Thomas DiBiase for posting on the internet without authorization articles from the Las Vegas Review-Journal. After identifying the infringements, Righthaven executed assignment agreements with the copyright owner of the articles, Stephens Media, giving to Righthaven “all copyrights requisite to have Righthaven recognized as the copyright owner of the Work[s] for purposes of Righthaven being able to claim ownership as well as the right to seek redress for … infringements of the copyright … in and to the Work[s].” Righthaven and Stephens had also executed a Strategic Alliance Agreement (SAA) that articulated limitations on Righthaven’s rights to any copyrights it was assigned. In both cases, the district courts dismissed the copyright infringement claims on the grounds that Righthaven lacked standing. In Hoehn, the district court granted summary judgment on the grounds of fair use as an alternative basis of decision. Righthaven appealed.

Consolidating the cases on appeal, the 9th Circuit agreed with the lower courts’ conclusion that Righthaven lacked standing to sue for infringement of the articles. Under the Copyright Act, only the owner of an exclusive right articled under § 106 of the Copyright Act has standing to sue for infringement. Notwithstanding the broadly worded language in the copyright assignments, the substance of the transactions between Righthaven and Stephens showed that Stephens effectively retained all of the exclusive rights to the copyrighted works. Stephens had “unfettered and exclusive ability” to exploit the copyrights, while Righthaven had no right to exploit, reproduce, distribute or collect royalties from the exploitation of the copyrighted works. The court reasoned that Righthaven’s contracts with Stephens only truly conveyed the right to sue for infringement, which is insufficient to confer standing. Righthaven’s attempt to argue that the parties’ intent was to convey all rights necessary for it to sue was unsuccessful, as the court found the contracts clearly gave Stephens the right to control the copyrights. Lastly, the court held that an amended SAA executed by the parties after the lawsuits were initiated was of no consequence, because generally standing is based on the property interests at the time of filing and because the amended SAA did not materially change Righthaven’s rights.

The 9th Circuit affirmed the district courts’ dismissal of each case based on lack of standing. The court vacated the portion of the order in Hoehn granting summary judgment based on fair use, on the grounds that the Court lacked jurisdiction to rule on the merits of the claim.